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Peugeot and Citroen have developed new diesel-electric hybrids that can deliver more than 80mpg.

The Peugeot 307 and Citroen C4 Hybride HDi use a conventional 90bhp 1.6-litre diesel engine married to an electrically-controlled gearbox, stop-start technology to save fuel at lights or in traffic and an electric motor.

The electric motor, powered by batteries that are charged under braking, is used for an all-electric mode at speeds of less than 31mph and boosts overall power to 121bhp when used in conjunction with the diesel engine.

It helps to improve fuel consumption from 60.1mpg on the combined cycle to 83mpg, and significantly lower C02 emissions of 90g/km. If the hybrids were treated by the Treasury in the same way as the Toyota Prius, company car drivers would pay tax based on 13%, not 18%, of its list price.

However, don't get too excited just yet – cars fitted with these hybrid engines won't be on sale until 2010 at the earliest.

Price is the biggest obstacle in the way of the car at the moment. Peugeot and Citroen say that while the technology is available, hybrid technology costs need to be slashed in half to make the cars sufficiently affordable options for buyers.